(Reuters) - Global hedge funds using computer programmes to trade stocks are set to post their best monthly performance since investment bank Goldman Sachs began tracking them in 2016, the bank said in a note to clients released on Wednesday.
Hedge funds that use algorithms to take long and short positions in equities had returned a positive 5.4% in the month to Wednesday, the bank said.
Success was due to gains made from shorting equities, or bets that stock prices would fall. These more than made up for losses that other computer programmes made believing shares would rise.
The S&P 500, a broad index of U.S. stocks, is down about 6% in September, hurt by rising Treasury yields.
World stocks were on course for their longest losing streak in two years on Thursday, as concerns mounted that inflation-focused central banks would need to keep interest rates persistently high.
September proved an opportunity for hedge funds to outperform the overall market, particularly those that do not take a view on how prevailing markets rise and fall.
These funds take long and short positions in what they believe to be undervalued and overvalued stocks rather than betting on a positive or negative performance in benchmark indexes such as the S&P 500.
More widely, the stock trading hedge funds that Goldman Sachs tracks took a bearish view on the stock of companies which offer buyers products that consumers may not necessarily need but may want, such as automobiles and designer clothes.
These stocks, often called consumer discretionary, have been shorted since the start of August and bearish positions over the last 40 days have been the highest since the first quarter of 2022, said Goldman Sachs.
Since August, an S&P index of these stocks has fallen about 8%.
By Nell Mackenzie
Editing by Mark Potter
